Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[MP3Mike]

So, that's enough shares for another split (2:1) after the 5:1 without needing shareholder approval to authorize more shares!

Don't they have to keep a buffer of available shares for all the stock options? (Like Elon's.) So you can't use up all of the available shares.

 

[Unpilot]

Impressive drop there

 

[Huskyf]

Impressive drop there

Alll macros drops not only Tesla

 

[LN1_Casey]

Hmmm... didn't someone just say they wanted to buy on a dip?

 

[M|S|M MYP]

Just give her the car

If they have no money and you have TSL A that’s the only reasonable thing to do

Which begs the question...Do they really have no $ or do they think since its family, the loan doesn't have to be repaid? Regardless if he owns TSLA or not, the principle is an agreement was made and broken (Family or not...i hate this predicament which is why i don't lend any $ to anyone period...i won't even lend my $TSLA shares to shorts

 

[Boomer19]

Thanks for providing an easy-to-reply-to post. First, two comments for @Boomer19:
1) your example scenario is way too complicated to reply to.
2) the DTCC only gives new shares in the amount of 400 and 800, not the 500 and 1000 you said.

Back to @Steve m:
I don't think you are correct about not needing to provide shares until the position is closed. The broker who borrowed the shares from the guy in the first place is on the hook to make sure he is, and remains, whole. The broker does this by ensuring that she (Susan) is able to return the shares when necessary, which can be for a number of reasons: (1) the lender (Len) sells his (borrowed) shares, (2) Susan closes her position, (3) the value of the shares increases past Susan's margin limits. (There may be other reasons.)

Hypothetically, Tesla announces on battery day that batteries are no longer necessary, they have a working Mr. Fusion. Stock goes from $420 up to $10,000. Now Susan, who has only ever borrowed one share, needs to return $50,000 worth of shares. If she can't, the broker has to instead, and they don't want to be in this situation. So, at the time of the split being effective, the broker would have borrowed the extra shares on Susan's behalf. Susan doesn't notice; before the split, she had borrowed $2,100 worth of one share, and after the split she has borrowed $2,100 worth of 5 shares @$420. So, no margin call or anything at that time. Now when Mr. Fusion comes along, the broker just takes everything they can get their hands on of Susan's, until they can satisfy her debt (or they assume the part she can't cover).

Of course the hypothetical is ridiculous, unless it isn't, but the reality is that TSLA could easily climb 100% in a couple of weeks, and there is no way that the broker would assume responsibility for that situation. As I said, they address it by borrowing on Susan's behalf at the time of the split, not later when it becomes necessary. They can do this, because it's part of the agreement Susan signed when she applied for permission to trade on margin and sell short.

correct 400 and 800.
i fixed it in a later post

but to the hypothetical that’s exactly what i was saying. the split didn’t force susan to cover the short or return the shares to the lender - the event that unveiled mr fusion did (and the ensuing surge in stock price)

if the broker that was lending to susan’s broker recalled the shares that were lent to susan AND the susan’s broker cannot obtain new borrow to cover susan’s short ( 5 shares at this point post split) then susan gets ‘bought in’ by her broker, usually at market order, and potentially gets smoked in losses on that short position on the surging stock price due to mr fusion

 

[MP3Mike]

I was a bit worried about why would the stock split not be 1 to 10 instead of 1 to 5.

Because a 1:5 split is the same as a 4:20 split. A 1:10 wouldn't be any fun.

 

[MTL_HABS1909]

Alll macros drops not only Tesla

Macros didn’t drop 2%

 

[phantasms]

Yay TSLA on sale!!!

 

[SOULPEDL]

It must be Friday again...

 

[M|S|M MYP]

Looks like they want the magic number to be $2050 today (or as close to it as possible)

 

[Artful Dodger]

Someone’s really trying to walk this down....

There is no try, there is only do or do not.

 

[ggr]

Spring being wound.

 

[oldTAVguy]

Looks like they want the magic number to be $2050 today (or as close to it as possible)

Less than 2050 is their desire. Even if it is only 1 cent.

 

[ggr]

correct 400 and 800.
i fixed it in a later post

but to the hypothetical that’s exactly what i was saying. the split didn’t force susan to cover the short or return the shares to the lender - the event that unveiled mr fusion did (and the ensuing surge in stock price)

if the broker that was lending to susan’s broker recalled the shares that were lent to susan AND the susan’s broker cannot obtain new borrow to cover susan’s short ( 5 shares at this point post split) then susan gets ‘bought in’ by her broker, usually at market order, and potentially gets smoked in losses on that short position on the surging stock price due to mr fusion

No, again you have missed the point. I should have left out the hypothetical. It was an exaggeration to try to get across the point that the broker will borrow the shares on Susan's behalf at the time of the split, whether she realizes it or not, whether she approves or not.

 

[wipster]

Well that was a nightmare, not a nap...

 

[StealthP3D]

Don't they have to keep a buffer of available shares for all the stock options? (Like Elon's.) So you can't use up all of the available shares.

I would assume so, but that would leave over 136 million shares for corporate purposes after another 2:1. They can always authorize more shares but the fact that they have enough on hand means they can announce another split without advance warning.

 

[M|S|M MYP]

Less than 2050 is their desire. Even if it is only 1 cent.

Gonna be interesting to see with this much volume if they can do it.

 

[jw934]

Sold a call today and bought 45 shares... Idk if it was good idea.

Read you post, then went and did the same. I think it is a great idea. thanks,

 

[Curt Renz]

Looks like they want the magic number to be $2050 today (or as close to it as possible)

Indeed. This is a monthly options expiration day, i.e. more interest than a typical Friday. It was just today that TSLA option strikes at $5 increments were added above $2000, between where they had been at only $50 increments. So still a relative desert between multiples of $50.

TSLA call option open interest and trading volume is heavy at $2050. Big option writers (mainly hedge funds and market makers) would want to keep the share price under or near $2050 (at least for today) to retain their premiums at the close.